For builders, navigating the 2024 housing market has required ample flexibility, adaptability, and resilience. Mortgage rate volatility, election uncertainty, significant weather events, pockets of soft demand, heightened land market competitiveness, and affordability concerns were among the challenges facing companies in the calendar year.
Public home builders have largely shared optimistic outlooks for the remainder of 2024 and 2025 during earnings calls, highlighting plans for community count, starts, and volume growth. Private peers shared similar sentiments with BUILDER, highlighting the numerous challenges facing the industry while maintaining positive outlooks for growth targets in 2025.
Navigating the Market in 2024
When sharing reflections on the 2024 housing market, executives from private home builders used phrases including “not great,” “resilient,” and “defined by adaptability.”
Minto Communities president Mike Belmont and Drees Homes president Tim Terrell both highlighted that because mortgage rates remained elevated even following the beginning of Federal Reserve’s rate cuts, the market was challenging, and many potential buyers took a pause. CBH Homes vice president Ronda Conger says the year reinforced the importance of adaptability, with themes of affordability and quick move-in options likely to remain important in 2025.
For DRB Group, corporate vice president of sales, marketing, and branding Char Kurihara says 2024 was the first post-COVID year that followed “a more seasonal pattern with regards to appointments and traffic.”
“We saw upticks in August, September, and October month over month in our traffic; however, as in most election years, there is a high level of engagement in the fall with a slight dip in sales until after the election,” Kurihara says. “This year, we are seeing traffic trend up and sales are holding steady [post election].”
Conger says 2024 demand for CBH Homes was “strong” after a slower than expected start in the spring. Conger says the “dynamic’ market gained momentum post-spring.
“We saw spikes in typical months that in prior years were slower,” Conger says. “External factors like interest rate fluctuations influenced demand, but by closely monitoring traffic, adjusting pricing and incentives as needed, we’ve stayed aligned with buyer expectations.”
Belmont says sales and traffic were “slower than the previous year” in 2024 with the exception of Minto Communities’ Westlake community in Palm Beach County, Florida.
“The uncertainty from the election put many buyers on pause. I believe the demand is there, [but there is] just a more deliberate consumer,” Belmont says.
Despite some buyers remaining on the sidelines, private builders were mixed in their utilization of sales incentives in 2024. Kurihara says DRB Group adjusts financing, prices, and incentives on a market-level basis, while Belmont says the high volume of active-adult business for Minto Communities meant the company did not deploy “meaningful incentives or rate buydowns” in 2024.
Conversely, Drees Homes and CBH Homes shared that incentives remain an important part of their respective operating strategies.
“For the past two years, we’ve implemented interest rate incentives across all divisions,” says Drees Homes national sales director Marla Telfair. “Additionally, we offer community-specific incentives to drive more traffic when needed. I anticipate we’ll continue with as similar approach in 2025.”
At CBH Homes, Conger says the builder continues to employ an array of incentives from buydowns, closing cost allocations, or adding appliances to homes. She says the company will “continue to watch and adjust [incentives] as needed based on market conditions” in 2025.
Resale Market and Competition
The private builders echoed sentiments of the public peers, noting that as the year progressed, resale inventory—which has been significantly constrained for more than year—began to increase in certain markets.
“Resale inventory has grown significantly in both Jacksonville and Austin,” Telfair of Drees Homes says. “To stay competitive, we ensure our pricing is attractive while offering customization options along with incentives like mortgage rate buydowns and closing cost assistance. In our sales presentations and marketing, we emphasize features that are less common in resale homes, such as smart home technology and flexible floor plans.”
Kurihara says the increase of resale inventory in some of DRB Group’s markets has helped drive prospective buyers to the company’s models.
“A majority of prospective buyers begin their search with resales and then they ‘discover’ new-home construction as a better alternative—due to builder/lender provided financing incentives—and/or the appeal of a brand-new home.”
Conger says CBH Homes continues to closely monitor the resale market and remains focused on move-in-ready spec homes to stay competitive against the existing-home market.
Approach to Land
Land and lot availability consistently ranked as a top concern for home builders in 2024, with many noting increased competition and elevate prices.
Despite these challenges, many private builders are employing a consistent approach to the land market given the need to grow.
Belmont says land prices remain “too high” and regulatory processes take “too long,” but Minto Communities has several new land deals in the pipeline that will come online in 2025 and 2026. Conger says CBH Homes is navigating rising prices and limited availability while continuing to release and develop homes in new areas across its home state of Idaho.
Drees Homes remains committed to growing in each of its operating markets and has not altered its land market approach over the past 18 months.
“We are actively looking for growth opportunities in every market that we operate in, but opportunities are limited due to a high demand and short supply dynamic,” says Drees Homes chief financial officer Andy Seitz. “There are still land deals out there that meet our underwriting standards, but the market is very competitive, and we expect this to continue for the immediate future.”
Outlook for 2025
Conger expects similar themes to characterize the housing market in the coming year, with interest rates and economic conditions playing pivotal role. She says CBH Homes will remain flexible and nimble to respond to market shifts over the next calendar year while targeting starts growth between 7% and 10%.
“Our production managers and trades have worked hard to reduce build times and costs, enabling us to meet buyer demand more effectively,” Conger says. “While outside factors can change the housing market in an instant, we believe in focusing on what we can control. We closely watch our traffic, pricing, and our competition to ensure we’re competitive. Our goal for 2025 is to showcase how beautiful our product is all while keeping it obtainable.”
Above all, Terrell says the chief focus for Drees Homes in 2025 will be delivering “the right product at the right price while maintaining a consistent sales pace.” The builder hopes to move cycle times to below pre-pandemic levels by mid- to late 2025. Additionally, Seitz says the company will be keeping a close watch on governmental regulations and policies introduced by the new administration “to evaluate their potential impact on our industry.”
